Debt/Income Ratio

Your debt to income ratio is a tool lenders use to determine how much money can be used for your monthly mortgage payment after you have met your various other monthly debt payments.

How to figure the qualifying ratio

Usually, underwriting for conventional loans requires a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) qualifying ratio.

The first number is the percentage of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including hazard insurance, HOA dues, Private Mortgage Insurance - everything.

The second number is what percent of your gross income every month which can be spent on housing costs and recurring debt together. Recurring debt includes things like vehicle loans, child support and credit card payments.

Examples:

A 28/36 qualifying ratio

  • Gross monthly income of $3,500 x .28 = $980 can be applied to housing
  • Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing
  • Gross monthly income of $3,500 x .41 = $1,435 can be applied to recurring debt plus housing expenses

If you'd like to run your own numbers, we offer a Mortgage Loan Qualification Calculator.

Guidelines Only

Remember these are only guidelines. We'd be thrilled to go over pre-qualification to help you figure out how much you can afford.

Americn Hero Mortgage can answer questions about these ratios and many others. Give us a call at 754-202-4376.

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